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What Is the Reality of Data Utilization
in Market Development?
Digital Transformation (DX) has been a hot topic for some time. DX refers to leveraging digital technology to transform existing business frameworks. While the term itself has existed since the 2000s, search volume for the keyword has surged in recent years, and many companies are accelerating their DX initiatives.
However, the reality is that progress varies significantly. What challenges are companies facing that prevent their DX efforts from proceeding as expected? This article provides a detailed explanation. *This article is the first in a four-part series.
The True Cause of Stalled DX Is Data Integration
The catalyst for promoting DX was the report titled "DX Report: Overcoming the '2025 Cliff' in IT Systems and Full-Scale Deployment of DX," published by the Ministry of Economy, Trade and Industry in September 2018. This report pointed out that if Japanese companies fail to achieve DX, they could face economic losses of up to 12 trillion yen annually from 2025 onwards. This is the origin of the term "2025 Cliff," which rapidly increased the attention on DX and made it a critical business topic.
Progress in DX varies significantly among companies. While an increasing number of companies are having their management teams directly oversee DX initiatives and utilize them for strategic planning, many others have merely migrated existing legacy systems to the cloud without addressing the importance of data utilization. Despite the high level of attention, the actual progress remains limited.
Factors hindering the progress of DX include a lack of urgency among management and the difficulty in visualizing cost-effectiveness, but the biggest challenge is Data Integration.
The Barrier of Data Integration
In many cases, multiple departments within a company have implemented different systems independently. As a result, even if there is data connectivity between systems, differences in data granularity and accuracy prevent the realization of operational efficiency or effective strategic planning, often leading to project failure.
When System A is implemented in the Sales Department and System B in the Marketing Department, there are many cases where the same company is recognized separately in System A and System B, even if the systems are integrated. Situations where companies are recognized as distinct entities occur due to factors such as corporate name changes or variations in notation.
Such discrepancies in recognition not only cause internal friction but also negatively impact communication with customers. If the Marketing Department approaches a customer as if they are a new lead while a sales representative is currently in negotiations with them, or if different campaign pricing is offered, it can lead to customer distrust and potentially damage the brand.
If data is not correctly integrated, the understanding of current conditions, such as customer attributes and revenue, becomes insufficient, increasing the risk of making erroneous decisions. Since the essence of DX lies in "rapid decision-making," low data accuracy is fatal.
The Proliferation of Cloud Tools and Challenges in Data Maintenance
In recent years, the cloud tool market has grown rapidly, and it has become common for companies to implement multiple tools. This has made the fragmentation of information within companies a serious issue. As each department implements cloud tools tailored to its specific needs—such as Customer Relationship Management (CRM/SFA) systems, business card management tools, and customer service-related tools—a situation arises where data across these platforms remains ununified.
When information is fragmented, data stored in individual tools is not integrated, making company-wide information sharing difficult. This makes it hard to grasp the overall picture of customers and the market, hindering strategic planning and decision-making. While data is often maintained manually, the reality is that this is time-consuming, labor-intensive, and has its limitations.
Effectively integrating this fragmented information is essential for the success of DX. As the number of tools increases, it is necessary to integrate and organize data across systems and establish processes to promote company-wide information sharing.
The "NICE" Concept as the Key to DX Success
To address the challenges of data integration, the "NICE" concept has been proposed. This consists of the following four processes.
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Normalize: Standardizing data granularity
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Integrate: Assigning Common Codes
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Correct: Standardizing Notations
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Enhance: Adding Accurate Attribute Information
By achieving this, companies can smoothly utilize data for DX.
When DX is discussed, the focus often tends to be solely on human resources and systems, but an awareness of "data" is essential to achieve true DX. There is no Digital Transformation without Data Transformation. It is necessary to approach data integration with this level of strong commitment.
Companies that achieve "NICE" are the ones that can overcome the "2025 Cliff" and leap forward in the future business environment. Companies should once again pay close attention to the unexpected blind spot that is data.
Summary
To succeed in DX, improving the accuracy of data integration is indispensable. The variations in data granularity and accuracy that many companies face become significant obstacles to operational efficiency and strategic planning.
By incorporating the "NICE" process, it is important to organize data appropriately and establish a foundation that enables rapid decision-making. By strengthening Data Transformation, companies will be able to overcome the "2025 Cliff" and gain a competitive advantage in the future business environment.
Next Article
The Essence of DX is a four-part series.
You can view the next article here.
The Essence of DX Vol. 2: Organizing Customer Data from the Entry Point Is the Shortcut to DX ▶
